TRENDING

Software dividends

By Thomas R. Temin

Jul 28, 2004

Thomas R. Temin

At about the same time Microsoft Corp. was announcing the largest shareholder dividend payout in corporate history, the Office of Management and Budget was trying to ensure rational policy on agency acquisition and use of open-source software.

Microsoft's three bucks a share is the dividend of rich, established companies'reminiscent of U.S. Steel or General Motors in the 1960s. The difference is that even as it matures, Microsoft is aware of new sources of competition it will have to deal with to retain its market dominance.

That mountain of cash upon which Microsoft was sitting was largely profits from its Windows operating systems. By virtue of its market dominance, Windows became a standard, in many ways enabling the revolution of computing ubiquity even while enriching Microsoft. But Windows is not open source, the yet-again new thing.

The maturing of Microsoft and the rise in use of open-source software shows how the regenerative qualities of the IT industry are still fresh. And it shows why neither vendors nor buyers of software can ever become complacent with today's technology.

Windows has a price tag. It's often part of the price of PCs and servers with which it is bundled. Open-source software may or may not have a price tag, depending on whether you buy a value-added version from a vendor such as Red Hat Inc. or simply go with freeware.

But all operating systems require on-going administration, maintenance and upgrading. A neighbor moving abroad gave me an old, high-end bicycle, custom-made in Italy. But it needs so many new parts and tweaks, it will end up costing me 75% of the price of a new one.

Like the bike, open source, whether free or nominally priced, isn't free in a lifecycle sense. It may have other technical advantages over proprietary software, but that is for each user organization to decide for itself, based on its requirements, and the terms and conditions under which it acquires the software.

Agencies' choices for technical solutions should not be based on abstract arguments over whether something is proprietary, open, commercial or divinely inspired, but rather on performance and lifecycle costs.